Most Read Contributor in Australia, September 2016
Introduced in October 2014, the Corporations Legislation
Amendment (Deregulatory and Other Measures) Bill 2014
(Bill) seeks to, amongst other things, withdraw
the ability of a 100-member voting block forcing the directors of a
company to call and arrange a general meeting (100-Member
Rule). As it stands, the Bill seeks to preserve the
current rights of members holding 5% of the voting shares in the
company (5% Rule).
In this respect, the Bill has received approval from most
stakeholders including industry participants and shareholder
associations. Given that companies are required to meet the costs
associated with arranging a general meeting including compliance
costs such as circulating material to other voting members, the
removal of this requirement is seen to reduce red tape imposed on
business. Industry participants argue that this will also increase
efficiency and shareholder value. Ultimately, the removal of the
100-Member Rule will provide a more accurate reflection of the
interests of shareholders as the decision to call a general meeting
will be based purely on a minimum volume of shares as opposed to
the number of individual shareholders.
Notably, the Bill does not impact on the current ability of a
block of at least 100 members to place a resolution on the agenda
of a general meeting after it has been called. The retention of
this aspect of the Corporations Act 2001 (Cth) has been
met with approval by most, as special interest groups will still be
able to raise any matters of concern. Coupled with the preservation
of the 5% Rule, most stakeholders believe that this aspect of the
Bill strikes an appropriate balance between protecting shareholders
and promoting business efficiency.
The Senate Committee has recommended for the Bill to be passed.
Royal Assent to the Bill is anticipated to be given in the near
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